The Debt Ridden, Undead America
November 27th, 2006America is like a chicken that has just had its head cut off. The carcass remains animated, for a time, bleeding and running around in the dirt, bumping into things. It isn’t quite dead at this point. It’s undead.
Or, maybe that’s just how it seems to me, as someone with no debt of any kind, no credit card balances and no desire to shop for crap I don’t need. Becky and I are “poor” in terms of income, yet we wouldn’t be living any differently if we had a bank balance many digits long. Well, we might have a couple of solar panels and a wind turbine if we were rich…
Via: San Francisco Chronicle:
If you’re like most people, you’ll be giving your credit cards a healthy workout over the next few weeks. So this is as good a time as any to consider a few harsh realities.
First off, the Center for American Progress, a liberal-minded think tank, has crunched data from the Federal Reserve and found that Americans for the first time owe more money than they make.
According to the center, average household debt levels topped average after-tax income by more than 29 percent as of this summer. Moreover, the average family is now spending 14.4 percent of its disposable income on debt repayments — the largest share since the Fed began collecting such data in 1980.
“This is an unsustainable trend,” said Christian Weller, senior economist at the center. “People simply can’t borrow at the same rate they’ve borrowed in the past.”
According to the Fed, total consumer credit debt, excluding mortgages, hit a record $2.4 trillion in September. Factoring in mortgages, outstanding household debt soars to about $12.3 trillion.
“According to the center, average household debt levels topped average after-tax income by more than 29 percent as of this summer.”
Let me make sure I understand: let’s say the national median household income is $50,000.00 (which is in the ballpark). Let’s further say that disposable income on that is $35,000.00. $35K x 129% = $45,150.00.
Is this the figure for average consumer debt? Or average total debt (including mortgage)? Neither seems plausible to me; the first seems high, the second seems low. For example, I have no debt other than mortgage, but my mortgage debt, even for my $70K house, is substantial.
If the former is true, if the average person has $45K of consumer debt, that number blows my mind.
Cars! That’s where it is.
So, between car payments and consumer debt, $45K for the average household.
In a way, I feel pretty good; in another way, that’s pretty scary.